A Critical Review of Allegations of Technology Suppression involving Patent Monopoly and Broad Scope in Management, Law and Economics
This article examines the evidence behind claims that innovation is hindered or blocked (termed technology suppression) by corporations' use of patents. In other words, are there ways in which the exploitation of the exclusive development right of the patent can be shown to retard the process of innovation, other than in the trivial sense of excluding third parties from the right to develop the technology covered by the patent? There are many references to this possibility in the management, economic and legal literatures, but two highly-cited papers stand out for grounding their claims of corporate suppression of innovation in the historical record (Dunford 1987; Merges and Nelson 1990). This paper shows that there are many errors of interpretation, both in the historical papers and in Dunford and Merges and Nelson's writing. Most important are confusions about the nature of technological competition and the difference between economic monopoly and an exclusive right. It is argued here that what is at issue in this work is the proper function of the patent institution. It is shown early in this paper that the understanding of the patent institution as a system of development prospects makes better sense of the historical narrative evidence and of the relatively recent Tetrapak case brought before the European courts than the rhetoric of competition policy and economic monopoly that continues to dominate analysis of such patent cases.